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  1. 1. Enterprise Resource Planning (ERP)
  2. 2. Presentation - Flow ERP – General Concepts ERP based applications - Options Building ERP solutions using Internal Sources Adapting Tailor-made ERP Solutions Developing ERP applications using External Sources      Brainstorming on the Options
  3. 3. ERP General Concepts
  4. 4. ERP – General Concepts  What is ERP?  The Current Scenario  Why ERP?  Definition  Evolution  Expectations  BPR & ERP  BPR – The Steps
  5. 5. What is ERP? facilitates company-wide integrated information systems, covering all functional areas performs core Corporate activities and increases customer service augmenting Corporate Image ERP is a solution, which
  6. 6. The Current Scenario Islands of Information Difficult to get timely & accurate information Heterogeneous Hardware & Software platforms & practices Poor connectivity between different organizational locations Sticking with obsolete technology Resist to change Lack of proven man-power to develop integrated software
  7. 7. Information Islands B
  8. 8. Why ERP? For Management – to know what is happening in the company One solution for better Management For cycle time reduction To achieve cost control & low working capital To marry latest technologies To shun the geographical gaps To satisfy the customers with high expectations To be Competitive & for survival
  9. 9. ERP - Definition “Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform”
  10. 10. Evolution of ERP 1960’s - Systems Just for Inventory Control 1970’s - MRP – Material Requirement Planning (Inventory with material planning & procurement) 1980’s - MRP II – Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.) Mid 1990’s - ERP – Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards – ERP II – Collaborative Commerce (Extending ERP to external business entities)
  11. 11. ERP – Expectations Integrating all the functions Integrating the systems running in all the locations Transparency of information using a single data source across the organization Software must be responsive Modular Flexible Easy to add functionalities Provide growth path
  12. 12. BPR & ERP Just automating the existing business practices will not help ERP to achieve the anticipated results because, OO + NT = EOO Business Process Re-engineering [BPR] brings out the deficiencies of the existing setup BPR and ERP will give way to implement new systems and the long pending improvements in the existing systems BPR may be time consuming but the scope can be restricted & controlled by the Management
  13. 13. BPR - Steps Step 1 Step 2 Step 3 Understand Simplify/Improve Automate Understand the existing systems associated with all the functionalities Draft & frame the possibilities & ways to simplify or Improve or eliminate the processes Implement with the help of ERP
  14. 14. ERP – Options OPTION 1 – MAKE [Using Internal resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department OPTION 2 - BUY Going for Tailor-made ERP packages available in the market like SAP, Oracle applications, Baan, PeopleSoft etc. OPTION 3 – MAKE [using External resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a software solution provider
  15. 15. Building ERP solutions using Internal Sources
  16. 16. ERP – Building using Internal resources – The Facts  Lack of adequate & qualified manpower  Not driven with clear focus on expectations, time & cost  Poor software project management  Lack of seriousness with the Management & the IT Team  High employee turnover  Lot of schedule gaps during Project execution  Normally project life is more  Frequent change in the scope with the approval of the Management
  17. 17. Tailor-made ERP Solutions
  18. 18. Tailor-made ERP solutions  About this option  Execution Phases  ERP product selection phase  Product selection - Parameters  Preparation Phase  ERP product acceptance - Options  Gap Analysis  Production Phase  Implementation Phase  Post-Implementation Phase  Pitfalls & Points of Concern  Critical Success factors
  19. 19. About Generalized off the shelf application s/w packages Modules based on rich functionalities for all business functions User tested with lot of installations No lead time requirement for software development Tuned for more users/networks with adequate & in- built security Parameterized for flexibility Can sit on latest hardware & software platforms Upgradation of functionalities with version control
  20. 20. Execution phases  ERP product selection  Preparations  Production  Implementation  Post-Implementation
  21. 21. ERP Product selection Phase  ERP Team formation for selection  Appointment of Consultants [if needed]  Scoping study  Product selection  Implementation partners selection  Hardware/Communication cost estimation
  22. 22. Product Selection - Parameters  Reputation of the ERP product  No.of installations in the geographical vicinity  % of the overall functional availability  Customization possibilities  After sales support  Your investment plan & budget  Implementation partner’s track record
  23. 23. Technology Support Costs 5 Strategic Requirement Levels Functionality Goal: To select the Most Suitable Software Package Solution Vendor ERP Product selection Criteria
  24. 24. Preparation Phase  Framing ERP Implementation Strategies  Formation of Apex & Steering committees  Functional & IT team formation  Training on ERP functions & features  Scope finalization  GAP analysis  Action plan to resolve the gaps
  25. 25. ERP product acceptance - options 1. Adapting directly, all the functions available in the ERP Product [Applicable for startup companies] 2. Change the way the firm does the business to fit the product [Compromising] 3. Customize the ERP product to suit the business Processes. [Customization]
  26. 26. GAP Analysis This is the process to identity the gaps by mapping the expectations of the company with the capabilities of the ERP product Results of Gap Analysis Directly Supported Workaround suggested Extension required Change in business process – suggested Not full supported Manual – not under the scope of ERP
  27. 27. Production Phase  Installing the software & hardware  Tuning the software to meet the customization needs  Master & Control data arrival as per the Product data structures  Location & people specific roles & rights allocation for module access & security
  28. 28. Implementation Phase  Conference Room Pilot [Parallel run]  Resolving the Parallel run issues  Training the end users  Live run
  29. 29. Post-Implementation Phase  Regular monitoring  Tuning [hardware/software] for patching the performance issues  Maintenance
  30. 30. Pitfalls & Points of concern  Costly comparing to custom-built options  Lot of hidden costs  Chances of cost & time overrun are high  The Level of customization/Indianization  Compulsion to pay for redundant modules/features  Vigorous involvement of all during implementation  Non-availability of special practices like Customer Complaint, Logistics  Linking historical data – offline & painful  The requirement of Change Management is a must  Dependency on outsiders is high  IT department – Poor grip on the Implemented systems
  31. 31. Critical Success Factors  The firm & optimistic approach of the Management - on adapting the ERP product driven methodologies - on customization - on monetary commitments  The dedicated Team  Good Training  Strict adherence to the Project schedules  Right technical infra-structure  Change Management
  32. 32. Custom-built ERP Solutions using external resources
  33. 33. Building ERP using Ext.sources  About this option  The Principle!  The Steps  Why?  Points of Concern  Software Vendor selection  Critical Success factors
  34. 34. About Here the whole package is designed & built  by keeping a specific enterprise & its business Practices in mind  by incorporating the improvements/additions  with due integration  without compromising or changing the current way of doing the business and  providing flexibility to accommodate your business fluctuations
  35. 35. The Principle! The best as seen elsewhere, need not be the the best for you. What is your best is what can be successfully implemented
  36. 36. The Steps 1. Software vendor selection 2. Detailed study by the vendor 3. Scope & platform finalization 4. Freezing the commercials 5. Development 6. Hardware addition/upgradation 7. Old master/transaction data migration 8. Parallel run with Integration & connectivity check 9. Implementation 10.Maintenance
  37. 37. Why?  Very economical while comparing the cost of implementing tailor-made ERP solutions  Less prone for hidden-cost hits  The company can opt for its choice of Hardware, Software & communication platforms based on the skill availability  The company and the software vendor have the direct relationship during the project execution. The proximity would be high & convenient.  IT department has good control over the Project  What is required only would be considered under the scope – No redundancy
  38. 38. Why? - Cont.  The requisite flavor of E-Biz & work-flow components can be embraced towards value edition  The existing practices & applications can be tuned and linked with the proposed package  Maintenance & improvements are easy & less costlier. Even IT team can maintain the setup after getting the source code
  39. 39. Points of Concern  Software development vendor selection  Requirement/scope finalization [high chances of retaining the islands as it is]  Less chances of Value addition  Not time tested  Chances of Prolonged project duration
  40. 40. The following traits should be considered while selecting the software vendor for building the ERP application  Technical expertise  Domain knowledge  Adequate manpower  Project management skills  Long existence in the field  Extra skills [e-biz & workflow] Software Vendor Selection
  41. 41. The Critical Success Factors • Clear Vision & support of the Management • Capabilities of the software development vendor • Scope & Expectations finalization towards meeting the ERP concepts • Strict implementation schedules & periodical monitoring • The involvement of the IT & functional teams
  42. 42. Key Process Integration via ERP Product Lifecycle Management Supply Chain Management Customer Management Supplier Collaboration Design Partners Consumers and Channels Beyond ERP
  43. 43. Thank You